European insurance sector outlook negative

Written by Adam Cadle

10/12/2020

The outlook for the European insurance sector is negative, Moody’s Investors Service has said in a report published today.

This outlook is driven by the negative impacts of low-interest rates and the
long-lasting economic effects of the coronavirus crisis on the economy, that will affect both the life and the property and casualty (P&C) sectors.

“Our negative outlook for the European insurance sector is driven by the persistence of ultra-low rates and the backdrop of a sharp economic contraction in 2020, both of which will continue to impact insurers’ revenues and profits next year,” Benjamin Serra, senior vice president at Moody’s Investors Service said.

“The macro-economic shock this year will also pose a downside risk to
asset quality and solvency in tail scenarios.”

Low rates will reduce P&C insurers’ investment income and weigh on overall results
next year, as well as putting pressure on life insurers’ future profits. Rising unemployment in
many European countries will also negatively affect life insurers’ activity in 2021, while the 2020 contraction in GDP will continue to constrain P&C volumes next year.

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